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'China's YouTube' pries path through profit puzzle

Owen Fletcher | July 29, 2009 is courting advertisers while opening other small streams of revenue

Ads are likely to remain Youku's main source of revenue. Companies need convincing to try advertising on Internet video sites instead of television, said William Bao Bean, a partner at venture capital firm Softbank China & India Holdings.

Force of habit and difficulty measuring the effectiveness of online video ads have deterred some advertisers, but a growing number are also experimenting with them, he said.

"Now it's just a matter of getting those guys to spend a larger piece of the pie," said Bean. "I think that's happening, it just takes time."

One of Youku's Chinese rivals,, is working on plans to start charging users for some content next month. Users who upload videos will be able to choose to charge viewers and split the money with 56, Wang Jianjun, CEO of, said by phone. The details of the plan are not finalized, but it is mainly aimed at users who create niche videos and do not post them elsewhere online, Wang said.

Youku does not charge users. It could consider charging subscription fees to viewers of high-definition videos in the future, but currently has no such plans, said Koo. Users rarely look for videos that require a very high resolution on streaming Web sites, he said.

"They're not watching Transformers on our site, trust me," Koo said.

Users appear to spend more time on visits to Youku than on visits to its closest Chinese rivals, and Viewers spent over 100 million hours on Youku in May, more than half the total time users spent on video sharing sites overall, according to iResearch, a Chinese Internet consultancy.


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